Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[The following information applies to the questions displayed below.] Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in

[The following information applies to the questions displayed below.] Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporations stock. The property transferred to the corporation had the following fair market values and tax bases:

Tax
FMV Basis
Inventory $ 14,500 $ 5,600
Building 61,000 52,000
Land 156,000 55,500
Total $ 231,500 $ 113,100

The fair market value of the corporations stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. (Any answer representing a loss should be entered as a negative number. Leave no answer blank. Enter zero if applicable.)

a. What amount of gain or loss does Ramon realize on the transfer of the property to his corporation?

b. What amount of gain or loss does Ramon recognize on the transfer of the property to his corporation?

c. What is Ramons basis in the stock he receives in his corporation?

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

MWC Corp. is currently in the sixth year of its existence (2017). In 20122017, it reported the following income and (losses) (before net operating loss carryovers or carrybacks).

2012: $ (55,500 )
2013: (20,750 )
2014: 37,750
2015: 165,000
2016: (15,500 )
2017: 412,500

A.) Assuming the original facts and that MWC elects to not carry back NOLs, what was MWCs 2015 taxable income?

b. If MWC does not elect to forgo any NOL carrybacks, what is its 2017 taxable income after the NOL deduction?

c-1. If MWC always elects to forgo NOL carrybacks, what is its 2017 taxable income after the NOL deduction?

c-2. Considering c-1, what is its 2017 book-tax difference associated with its NOL? Is it favorable or unfavorable? Is it permanent or temporary?

Book-tax difference

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Audit Value Factor Making Managements Head Turn Internal Audit And IT Audit Series

Authors: Daniel Samson

1st Edition

1138198129, 978-1138198128

More Books

Students also viewed these Accounting questions

Question

d. Who are important leaders and heroes of the group?

Answered: 1 week ago